Analysts flag caution as FIIs net short, DIIs up F&O sell side bets by 200%

F&O market cues: FIIs hold nearly 2 short positions in index futures for every long trade; DIIs net sold over 34,000 contracts in the last 2 days, shows NSE data.

As we move closer to the May month expiry, derivatives market action seems to be heating up. Foreign Institutional Investors (FIIs) had turned net sellers seven trading sessions ago, with the long-short ratio in index futures down to 0.6 from 1 on May 13, 2025.  The long-short ratio in index futures is derived by taking into account the number of buy side open positions in index futures versus sell side open bets.  As of May 21 (Wednesday), FIIs continue to remain net short in index futures, with the long-short ratio still at 0.6 - this ratio implies presence of nearly 2 short (sell side) positions in index futures for every long (buy side) trade.  Read Stock Market Updates Today LIVE   Meanwhile, over the last two trading session’s domestic institutional investors (DIIs) turned aggressive sellers and net sold 34,295 index futures contracts. Data from the NSE futures & options (F&O) segment reveals that DIIs have increased short positions in index futures by 200 per cent in the last eight trading sessions.  As per the NSE F&O data, DIIs held 27,456 contracts on the sell side of trade in index futures as of May 9. This tally has now increased to 82,511 contracts. As a result of which, DIIs long-short ratio in index futures from a bullish 3.2, has dropped to a neutral stance at 1. Meaning, as of May 9 DIIs held more than 3 long positions in index futures for every short trade; but now own every long bet is equally matched with a short position.  ALSO READ | Where's the stock market headed in bull vs bear battle? An investor guide  Ajit Mishra, SVP Research at Religare Broking explains that DIIs in general use F&O positions as a hedge tool; whereas FIIs tend to take a directional call. The current short bets by FIIs need to be closely tracked, if these do get rolled-over to the June series.  Having said that, both DIIs and FIIs seem to be circumspect of the Indian market, especially with Nifty around 25,000 levels. Nifty options data indicate that FIIs and DIIs both seem keen to defend the Nifty resistance around 25,000 - 25,200 levels, for now, Ajit Mishra added.  ALSO READ | Indian stocks unlikely to give significant return in next 1-yr: Marc Faber  Meanwhile, among the other participants in the F&O segment, proprietary traders are seen holding nearly 3 short positions in index futures for every 2 buy side bets. Retail investors are the most bullish lot, with nearly 3 long bets for every 2 short positions.  Among individual stocks on Wednesday, Titagarh Rail Systems saw 28.4 per cent increase in open positions, as the stock advanced 1.2 per cent. On the other hand, Dixon Technologies saw addition of 23.8 per cent open bets alongside over 6 per cent fall in its share price.  ALSO READ | Where's the stock market headed in bull vs bear battle? An investor guide